ON Semiconductor Corp (NASDAQ:ON), a leading semiconductor manufacturer, announced today a significant restructuring plan as part of its "Fab Right" strategy, aiming to optimize its manufacturing network and consolidate its global corporate footprint.
The company disclosed plans to consolidate nine of its sites and reduce its global workforce by approximately 1,000 employees. Moreover, around 300 employees will be either reassigned or asked to relocate to other company locations.
The restructuring process is expected to be completed throughout 2025, adhering to local laws and regulations. ON Semiconductor anticipates incurring employment-related charges between $65 million and $80 million for severance, benefits, payroll taxes, and related expenses over 2024 and 2025. The company stated that the majority of these charges would be accounted for in the calendar year 2024.
Despite the anticipated cost savings from the workforce reduction, ON Semiconductor plans to reinvest a substantial portion of the savings into its ongoing workforce and select business initiatives. This reinvestment strategy suggests that the restructuring may not lead to a significant decrease in future operating expenses for the company.
The company's announcement includes forward-looking statements regarding the expected timeline and financial impact of the restructuring. Investors are advised to consider the risks and uncertainties associated with such statements, as detailed in ON Semiconductor's filings with the Securities and Exchange Commission, including its 2023 Annual Report on Form 10-K.
This news is based on the latest 8-K filing by ON Semiconductor with the Securities and Exchange Commission. The company's actions reflect ongoing efforts to streamline operations in a competitive semiconductor industry, focusing on efficiency and strategic allocation of resources.
In other recent news, ON Semiconductor has been the subject of several analyst adjustments following its recent earnings report and market forecasts. TD Cowen maintained a positive outlook on the company's shares, albeit with a reduced price target of $85, citing the company's strong gross margin and growth potential.
Similarly, Mizuho retained a Buy rating on the stock, despite lowering the price target to $87, emphasizing the company's robust silicon carbide (SiC) business as a key growth driver.
Benchmark also maintained a Buy rating but reduced its price target to $80, highlighting SiC as a significant momentum driver for ON Semiconductor. On the other hand, Rosenblatt Securities kept a Neutral rating while reducing the stock's price target to $70, citing cautious expectations for a slow demand recovery. Lastly, KeyBanc maintained an Overweight rating on the stock but lowered its price target to $90, attributing the revision to market corrections in the automotive and industrial sectors.
These recent developments reflect analysts' mixed views on ON Semiconductor's prospects amid shifting market sentiments and evolving industry trends.
InvestingPro Insights
In light of ON Semiconductor's recent restructuring announcement, real-time data from InvestingPro provides additional context for investors. With a market capitalization of $32.34 billion and a P/E ratio standing at 14.84, the company appears to be trading at a low price-to-earnings ratio relative to near-term earnings growth. This could suggest that the stock is undervalued given its earnings potential. The company has demonstrated a strong gross profit margin of 46.83% over the last twelve months as of Q1 2024, indicating efficient management and the potential for profitability.
InvestingPro Tips further reveal that analysts have revised their earnings downwards for the upcoming period, reflecting caution amidst the company's restructuring. Moreover, while analysts anticipate a sales decline in the current year, ON Semiconductor is recognized as a prominent player in the Semiconductors & Semiconductor Equipment industry, which may position it well for future growth.
For those interested in deeper analysis, InvestingPro offers additional tips to help navigate ON Semiconductor's financial landscape. Readers can explore these insights by visiting https://www.investing.com/pro/ON and take advantage of the exclusive offer using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 13 more InvestingPro Tips available, investors can gain a comprehensive understanding of the company's financial health and industry standing.
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